Spring Statement 2022: Schools avoid cutbacks but high reserves mean rising costs will need to be covered
The cost of living was the main focus for Spring Statement 2022 as the UK continues to feel the affects from the current developments in Ukraine and sanctions imposed upon Russia. As a result, schools and the education sector got no specific mentions at all.
But what announcements from the chancellor will impact the sector moving forward?
Well firstly the fuel duty cut of 5p per litre will at least help reduce the cost of using the school minibus - however the reduction is only likely to reduce the cost of a tank of fuel by approximately £3 - so not much saving is to be made there!
The National Insurance threshold will rise to £12,570 in July which will improve the back pockets of those on low incomes in the school by around £330 per year and means slightly less cash will be being paid over to HM Revenue & Customs for those individuals each month by employers.
The Employment Allowance will also increase from £4,000 to £5,000 per annum from April. This will be an additional £1,000 saved in cash for schools. However, those academy trusts with more than one employer PAYE reference should remember that they can only claim one allowance not an allowance under each reference.
And finally, will the apprenticeship levy be no more? Rishi Sunak stated the following:
“Just 18 per cent of 25 to 64-year-olds hold vocational qualifications, a third lower than the OECD average. And UK employers spend just half the European average on training their employees. So we will consider whether the current tax system, including the operation of the apprenticeship levy, is doing enough to incentivise businesses to invest in the right kinds of training."
The apprenticeship levy is paid by academies and trusts with a payroll bill of £3 million or more, and by councils on behalf of local authority-maintained schools. Schools can then draw down funds from the levy to pay for apprentice training.
However, many fail to make use of the system and effectively see the levy as an additional "tax".
So the Statement provided little boost for the sector. But should that come as any surprise? The Kreston UK Academies Benchmark Report revealed that many academy trusts have significant surplus reserves to utilise as the UK continues its journey into a post-COVID world (yes I know it's still around, but we're all pretending it isn't aren't we?). So the government will feel that schools have enough "credit" to tackle the energy cost increases and challenges around recruiting or hiring adequate staff when shortages occur.
Lets not also forget that inflation is now at a whopping 6.2% - the highest in 30 years - and therefore non-fixed contract prices are likely to increase for schools. It might be time to explore certain key contracts if your school or academy trust has no fixed price in place.
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